Firstly, the question arises of how exactly does a data packet look when it is encoded. Usually, the data tends to be transmitted in the form of a packet or a frame. The following diagram is an example of a packet that is sent on an Econet network.

In a similar vein the packet structure can also be seen in a ring network.

In real life codes are required in order for successful communication to occur - for example, a language can be thought of in the context of a code. In the approach to data representation in the computer environment it is often useful to point out why certain codes, used in other aspects of society, are not implemented here. This can be shown, using Morse code as an example.

• In Morse code each character is represented by a series of dots and dashes. Although these could be interpreted as bits, it would not be suitable for data communications, because characters would be represented by a different number of bits - letter A = dot, dash whereas the letter S = dot, dot, dot.
• Telegraphers distinguish letter groupings by a time delay between characters, which is obviously impractical in a computer based system.

Huffman coding is also an example of a data compression technique used when sending encoded information. Data compression is used to reduce the number of bits that have to be transmitted, in order to reduce the cost of using the network.

The last area that is encompassed in the concept of encoding data is the security and privacy of the transmitted information.

Finally, it is important to grasp exactly where on the ISO-OSI model the encoding area of a protocol is implemented.